Financial planning when a family member has special needs requires additional attention.

Financial planning is tricky enough, but planning when a family member has special needs requires even more attention. If you fail to provide any funds or support for a family member with special needs, his future may be left to a judge, and his well-being could suffer. If you leave too much, he could be ineligible for government services or be forced to pay back the state for some of his care.

SF Gate’s recent article, “Financial planning when a family member has special needs,” says the biggest mistake you can make is not planning at all. That frequently happens when caregivers become so overwhelmed that it prevents them from planning at all. However, it doesn’t have to be a major undertaking in every case. A young family may just need some life insurance and a basic estate plan, as needs can change over time.

The article says that if you do only one thing, you should write a letter of intent. This letter details a family’s hope for the individual. It tells of your vision for the child or family member’s life – who will be involved and how. This letter of intent can also include crucial information about medical and financial information, as well as other essential information, such as your loved one’s daily routine, and his likes and dislikes.

You should update this letter of intent annually. All the money in the world can’t provide the information parents may have in their hearts and minds for their children. Best of all, it’s free to create.

Every family’s circumstances are unique, so it can be very confusing to understand what’s needed for your particular situation. Seek help wherever you can. Ask other families with special needs for their input and consider taking any free training offered by advocacy or support groups.

Financial planning when a family member has special needs is a situation where a paid professional, such as an elder law attorney or a lawyer who specializes in disability law, can be critical.

Your elder law attorney and your financial advisor will be invaluable members of your advisory team. They can educate you about the finer points of the various financial tools available, like special needs trusts, ABLE accounts, and more. Commonly used financial tools, such as life insurance and Roth IRAs, take on new weight for families in this situation. And experienced attorney will have special knowledge on the implications the various tools will have on taxes, government benefits and more.

Finally, don’t forget to look after your own financial well-being. If you don’t take care of yourself, you won’t be able to provide for your family.

Freelancers, gig-workers or solo entrepreneurs have always had a hard time saving for retirement. It takes a tremendous amount of self-discipline to take money that would otherwise go to run a household or pay quarterly taxes and set it aside in a retirement account. Without an automatic withdrawal from a regular pay check, it’s tough. However, there is an option, says Next Avenue in the article “A Retirement Plan for the Self-Employed: The Single 401(k).”

Known as the Solo 401(k), the Self-Employed 401(k), Individual 401(k), or the Single 401(k), this is a retirement plan designed for self-employed people or sole proprietors, and if applicable, also for their spouses. With a Solo 401(k), 100% employee salary deferral of up to $19,000 is permitted in 2019, if you are under 50. If you’re over 50, that number can go up to $25,000. It also allows an employer profit-sharing contribution of up to $56,000 per year, which lets you save even more by being both the employer and an employee of your business.

Using the Solo 401(k) can save you more than $14,000 in taxes per year (that is, assuming a $56,000 contribution and a 25.7% corporate tax rate), while simultaneously offering a loan provision, just in case you need to tap your savings.

Who qualifies for a Solo 401(k)? You have to be truly self-employed, either in your own full-time small business or a part time gig. Your business can be a sole proprietorship, partnership, or corporation, but it can only have no other employees or employees who aren’t eligible to participate in a traditional 401(k). Examples of people who aren’t eligible would be people who are under age 21 or who work fewer than 1,000 hours per year.

The Solo 401(k) works well for a husband/wife partnership or a small business with only part-time employees.

It provides flexibility so that when times are good, you can put away a lot. When times are lean, you can save less. Additional benefits:

Reduced taxable income for pre-salary contributions.

Built-in profit sharing for maximum savings deductible against business income.

The cost of the plan is a deductible expense.

Investments grow tax deferred.

Higher contribution limits than SEPs and SIMPLE IRAs.

Small business owners don’t have an HR department to rely on, so it’s a good idea to talk with your financial advisor or estate planning attorney about how a Solo 401(k) may work for your long-term retirement and estate plan.

Your Executor (Personal Representative) may decline to serve if you don’t prepare ahead.

When you’ve finally decided who you trust enough to serve as your Executor (called a Personal Representative in Florida), you’ll need to take the next step. It involves having a conversation with the person about what you’re asking her to do. You’ll need to ask if she is willing, says the Pocono Record in the article “Don’t assume person is willing to be your executor.” People are often flattered at first when they are asked about this role, but if they don’t fully understand the responsibilities they may decide not to serve just when you need them the most.

Once your Executor has agreed to act on your behalf and you have a Last Will and Testament prepared by an estate planning attorney, tell your Executor where your original Will is located. Remember that in addition to knowing where the document is, she’ll also need to have access. If the original Will is kept at home in a fire-proof box or a locked document box, be sure to tell her where the key is located.

If you feel that the Will would be safer in a bank’s safe deposit vault, make sure that your Executor will be able to access the safe deposit box. That may mean adding her to the list of people who have access. After your death, she may be permitted to enter the box with a bank representative solely for the purpose of obtaining the Last Will and Testament – nothing else. However, you should check with your branch first.

After you die, your Executor (Personal Representative) and your estate’s attorney will file your original Last Will and Testament with the probate court. The judge then issues Letters of Administration (called Letters Testamentary in other states), which says that your Executor has the authority to open the safe deposit box to inventory its contents. The Executor must complete an inventory form and have any personal property found in the safe deposit box appraised at its fair market value as of the date of your death.

To make your Executor’s job easier, create a list of your assets and debts and include information she’ll need to complete her task, such as account numbers, titling, etc. She’ll also need contact information and account numbers for insurance policies (homeowners, car, Medicare supplements, life), veterans’ benefits, pensions, retirement accounts and any other assets.

Some people store their information on their computer. But if your Executor can’t access your computer due to distance, or can’t get into your computer because she doesn’t have your password, you may want to create a hard copy document in addition to keeping the information on your computer.

Taking on the role of an Executor (Personal Representative) is a big job. You can show your appreciation, even after you are gone, by making it easy for your Executor to find all the information she’ll need.

Here are a few of the most common questions I receive about NFA (National Firearms Act of 1934) firearms and NFA gun trusts:

If I’m carrying an NFA firearm in Florida, and am stopped by a LEO (law enforcement officer), what do I need to produce to prove that I legally possess that item?

Technically, you have no obligation to prove ownership to a police officer, sheriff, deputy, or FWC officer. Only the ATF and perhaps the IRS have the legal authority to demand to see your tax stamp. But, unless you potentially want to spend a night in jail, common sense dictates that you produce a copy of your tax stamp. That’s all that’s required. You don’t have to carry around a copy of your trust. (Although, I do have several clients who store a copy of their trust and their tax stamps in the cloud so they can access them if absolutely necessary). Keep your original tax stamps somewhere safe, put a copy in your binder, and keep a copy with the weapon AT ALL TIMES.

I’m at a range with friends and my NFA regulated weapons are present. Can my friends legally handle and fire those items?

As long as your have your tax stamp in your possession and the weapons are within a few feet of you, you can share away. This is true whether your NFA weapons are in a trust or not. However, if none of those people are named as current trustees in your NFA firearm trust document, the law is strict – within your presence means within your presence. As long as those NFA weapons are where someone who isn’t legally authorized can touch them, you can’t leave the immediate area to go to the bathroom, buy more ammo, or grab something from your car.

I have a friend who I know is a responsible non-NFA gun owner. He’d like to use one of the NFA regulated firearms in my trust for an afternoon at the range when I cannot attend. My brother has also asked me whether he can take it on a hunting trip if I’m not with him. Can I let them borrow an NFA firearm that’s in my trust?

It depends on how your NFA firearm trust document is written. Some are written to allow the Grantor/Trustee (you) to appoint a temporary special trustee and lifetime beneficiary. This person can possess and use the trust property for a certain period of time while you’re still alive, but has no power to sell or otherwise transfer the property and has no power over the trust document. Other trusts make no provisions for a special trustee. Consult with the attorney who drafted your gun trust to see if it’s allowed and what you’d have to do to make it legal.

Of course, NFA firearms that are owned by individuals – not trusts – can never be loaned to anyone who isn’t a couple of feet away from the registered owner.

What are the legal risks to the trust and to me if there is a mishap involving a NFA weapon?

Most NFA firearm trusts are revocable living trusts, which means the trust provides absolutely no liability protection to you or anyone using any of the guns – NFA firearm or not. If you loaned the firearm to someone else, you’ll probably be sued. To protect yourself, do your due diligence and make sure the person you loan any weapon to isn’t a criminal and doesn’t have a history of carelessness, drug or alcohol abuse (remember – medical and recreational marijuana users are prohibited from possessing any guns), anger issues, domestic violence, etc).

Angelina Jolie has allegedly made the decision to reward her son Maddox for supporting her during her divorce from Brad Pitt. Jolie wasn’t happy that only one out of her six children totally sided with her in the couple’s divorce. Others close to the Jolie/Pitt family say that Brad is upset with Jolie for leaving the other children out and treating Maddox as her “Golden Child.”

“Brad is in an absolute fury and fit to be tied over Angie’s moves!” revealed the insider. “It finally seemed like they were reaching some kind of compromise with the divorce. But he’s been blindsided by this mess over Maddox.”

In September of 2016, the story surfaced that Jolie decided to file for divorce from Pitt, after becoming increasingly worried about his parenting methods. The news reportedly followed a nasty encounter between Brad, Angie, and Maddox that put the family through one of the nastiest celebrity divorce and custody battles in recent memory.

Jolie claimed that Pitt allegedly attacked Maddox during the fight. An investigation was made by the Los Angeles County Department of Children and Family Services, but no charges were filed. However, according to a family friend Brad remains very upset by the entire situation and especially angry with Angelina for not setting the record straight.

Brad feels that his other children are getting short-changed, and he won’t permit it, the friend says.

Brad Pitt is angry that Angelina Jolie would treat their children so differently, cutting out Pax, Zahara, Shiloh, and 10-year-old twins Knox and Vivienne. Leaving it all to Maddox is just wrong in Brad’s view.

“Maddox took his mother’s side in the divorce, and now she’s made him the head of her movie empire,” said the insider.

“He’s her golden boy, but Brad feels someone needs to remind her that she has five other children!”

If this rumor is true, then most likely Pitt and Jolie will continue to wage brutal battles regarding the welfare of their children for years to come.

I have no idea how old these children are, but a parent can’t completely disinherit her minor children – at least not in Florida. Maybe they can in California – it’s like another country out there. 🙂 But Angelina Jolie certainly can leave her assets to her children unequally and she can disinherit them once they’re adults.

ABLE accounts are a simple way for families with disabled loved ones to save, and now they’re even better in Florida.

ABLE account holders received a boon recently, but it seems to have gone unnoticed.

Florida Governor DeSantis signed 38 bills the other day, but the only one widely reported had to do with emergency personnel being given permission by the government to exercise a certain Constitutional right when entering dangerous situations. But one of those many bills was a game-changer for families with disabled loved ones.

ABLE accounts have been around for a few years. They provide people with disabilities a simple, tax-advantaged way to save without affecting government benefits like Supplemental Security Income (SSI) and Medicaid. But there was one huge drawback – when the account holder died, Medicaid could take what was left in the account, up to the amount of Medicaid benefits the person received.

Governor DeSantis eliminated that provision in Florida, effective June 30, 2019. Now, when the account holder dies, anything left in the account goes to his or her chosen beneficiaries.

These accounts do have some limitations, and a special needs trust is sometimes a better solution. But, in many cases, an ABLE account and a special needs trust work together beautifully. If you or someone in your family has a qualifying disability that occurred before age 26, talk to your estate planning attorney, elder law attorney, or financial advisor to see whether an ABLE account is a good choice for you.

Other articles you may find interesting:

Determining whether it’s time to take over a parent’s finances can be tricky.

When is it time to take over a parent’s finances? The realization that parents can no longer be entrusted with their own finances often comes on the heels of the decision to take away the car. This is a very difficult issue because the parents of Baby Boomer kids are the “Greatest Generation.” As a general rule, they were and are extremely private about finances. The steps to take are outlined in this article, “Here’s how to know when it’s time to take control of your parent’s finances,” from Considerable.

The tricky part is figuring out the timing. If it is done too soon, you’ll be battling with your parents. Conversely, if it is done too late, major financial damage may be done.

Keep your eyes open for signs that your parents are not able to maintain their responsibilities. That includes changes in their behavior, misplacing things and not being able to locate them, or making too many trips to the bank for reasons that they can’t or won’t explain. Other clues that it may be time to take over a parent’s finances: purchasing things they never bought before, or paperwork piling up on a desk that used to be tidy and organized.

One adult daughter didn’t realize that her mother was being scammed until Mom had sent more than $100,000 to scammers. Elderly financial abuse is pervasive, and the Senate Special Committee on Aging estimates that elderly Americans lose some $3 billion annually to financial scammers – including family members!

One elderly woman, suffering from dementia, forgot to pay her long-term care insurance premiums and lost the coverage. The company had sent five notices, but she didn’t understand the importance of those notices. (Many insurance companies now request a back-up contact person who can be notified if a payment is missed).

Even children who have close relationships with their parents can miss the signs. Often, the children don’t step in until the parent has a health crisis, and, at that point it becomes clear that things have not been right for a while. If one parent is overwhelmed by taking care of his or her spouse, an otherwise organized parent may become prone to making mistakes.

The earlier children can become involved, the better. Children should ideally become involved with their parents while they are still healthy and able to communicate the necessary information about their financial lives. If the family waits until illness strikes or dementia becomes apparent, there may be significant and irreversible damage done to the parent’s finances. Sadly, even with well-drafted estate planning documents, a guardianship court may have to become involved if the parent is not willing to let the children help.

An elder law attorney will be able to help the family as they transition the parents away from being in charge of their own finances. It’s not always an easy process but sometimes it’s necessary.

Other articles you may find interesting:

Medicaid for payment of long-term care is becoming a factor in many estate plans.

The conversation that you have with an estate planning attorney when you’re in your thirties – with a new house, young children, and many years ahead of you – is different than the one you’ll have when you are much older, maybe just before you retire. The estate planning attorney will know that you are about to enter a time in your life when the legal documents you prepare are more likely to be used, says the article “Learn about legal documents and Medicaid” from the Houston Chronicle.

It should be noted that everyone needs an estate plan at any time of life so they can state their wishes for how assets are distributed and also name a person who will speak on their behalf in the event of incapacity because of an illness or injury.

So an estate plan should include a Durable Power of Attorney, which names someone you chose to serve as your agent to transact business and handle your financial matters. There should also be a Declaration of Preneed Guardian, in the event of later incapacity, and a HIPAA medical authorization document. In some instances, a designation of remains is prepared in order to name an individual who will be the appointed agent to care for the body at the time of death.

However, there’s another reason why you’ll need to meet with an attorney later in life. As we get older, the need to address long term care becomes more important. Medicaid eligibility may be part of that plan. Making the right decisions now could have a big impact on the quality of your retirement and your medical care.

If you haven’t updated your Will or your Powers of Attorney, it would be wise to do so now. You’ll need a document to clearly authorize your agent to deal with assets. If your documents are out of date, or named agents have predeceased you, it may not be effective, which could lead to problems for you and your heirs.

The document may also need to include a broad gifting power for your named agent, so assets can be transferred out of the estate. If this detail is overlooked, your agent may not be able to protect your assets.

This is also the time when you may want to take steps to protect your children upon your death or upon the death of the second parent. If your goal is to arrange your assets to be eligible for Medicaid coverage, this planning should be done well in advance. Many states pursue recovery of assets when a person has received Medicaid benefits, so it needs to be done correctly.

Your attorney will be able to work with you and your family to address your specific situation. It may mean that your estate plan will include trusts, or that certain assets will need to be retitled. Meet with an estate planning attorney who is familiar with your state’s laws. And don’t procrastinate.

Other articles you may find interesting:

ABLE accounts may be a great tool for families who need special planning.

The Achieving a Better Life Experience Act (ABLE) accounts were created to provide a tax-advantaged savings tool for individuals with disabilities and their families.

Millions of Americans with disabilities and their families depend on government benefits to help provide income, health care, food and housing assistance. Eligibility for assistance through Supplemental Security Income, SNAP and Medicaid is based upon a resource test, so disabled individuals seeking benefits are typically limited to no more than $2,000 in savings or assets. This can present a difficult problem.

An ABLE account is designed to be a savings or investment account to supplement government benefits. It can be a powerful strategy for individuals, who previously were unable to build supplemental funds outside of a trust for their needs. These accounts are funded with after-tax contributions that can grow tax-free when used for a qualified disability expense. The account owner is also the beneficiary and contributions can be made from any person including the beneficiary, friends, and family.

These accounts are available to individuals with significant disabilities whose age of onset of disability was before they turned 26. A person could be over the age of 26 but must have had an age of onset before their 26th birthday.

Contributions are restricted to $15,000 per year. The total contribution amount per beneficiary is limited by state law. Individuals can have up to $100,000 in an ABLE account, without impacting SSI eligibility. The first $100,000 also does not count toward the $2,000 resource restriction.

A frequently asked question is whether to use an ABLE account or a Special Needs Trust (SNT) for planning purposes. ABLE accounts are subject to certain limitations that make it impossible, or at least ill advised, to use them instead of a SNT, but they may be a great tool in addition to an SNT. Remember that ABLE accounts can only receive $15,000 in deposits each year, but, in most cases, Special Needs Trusts can receive much larger contributions. This is an important difference for parents who want to leave more substantial assets to their child when they die but don’t want to jeopardize the child’s eligibility for critical services.

When the beneficiary of the ABLE account passes away, any funds left in the account are typically reimbursed to the state to defray the costs of providing services during the beneficiary’s life. However, that may not happen with a properly drafted Special Needs Trust.

As of 2019, ABLE account owners who work, but don’t have an employer-sponsored retirement plan, can now save up to $12,140 in additional savings from their earnings.

Ask your estate planning attorney about possibly coordinating an ABLE account with a Special Needs Trust.

The estate, which includes a 10,000 square foot Caribbean villa in addition to Paisley Park and master tapes of his recordings, has been estimated by some to be worth in the neighborhood of $200 million. But what will be left after all the battles between heirs and the consultants (whose fees are adding up)?

The heirs are now in a court battle with the estate’s administrator, which has already blown through $45 million in administrative expenses. That’s from a probate-court petition filed by Prince’s heirs. They’ve asked the court for a transition plan and a new administrator, which is scheduled for the end of June.

One observer noted that Prince’s estate may take decades to resolve – all because there was no Will.

So a judge had to determine who Prince’s heirs were. More than 45 people stepped up to claim inheritance rights when the Purple One died in 2016. Some said they were wives, others said they were siblings and one said he was the artist’s son. DNA testing debunked that claim.

The list of heirs has been narrowed down to six: his full sister, Tyka Nelson, and half siblings Norrine Nelson, Sharon Nelson, John Nelson, Alfred Jackson and Omarr Baker.

Until fairly recently, the heirs were divided and quarrelling among themselves. For now, they have come together to challenge the court appointed bank, Comerica, that became the estate’s administrator. They don’t agree with Comerica’s cash flow projections, accounting, or inventory of Prince’s estate assets. They also claim that Comerica is not being responsive to their concerns and that Comerica is the reason that Prince’s estate is $31 million behind on estate taxes.

The company stated that it was the best possible administrator of the estate and insisted it is making all tax payments necessary to settle the estate.

Everyone needs to have at least a Will (even with a small estate), so that heirs are not left battling over assets. While Prince may have thought of himself as too young to die, a Will and a plan for his estate would have preserved his assets for his heirs and let him determine what happened to his music and his artistic legacy.